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BIDDERS’ TECHNICAL CONFERENCE PACIFICORP REQUEST FOR PROPOSALS

BIDDERS’ TECHNICAL CONFERENCE PACIFICORP REQUEST FOR PROPOSALS . May 15, 2007. Agenda. Communication Protocols and Bidders’ Contact Log Reports Limited Re-opening of Request for Qualification (RFQ) Process Revision of Request for Proposal (RFP) Due Date

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BIDDERS’ TECHNICAL CONFERENCE PACIFICORP REQUEST FOR PROPOSALS

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  1. BIDDERS’ TECHNICAL CONFERENCEPACIFICORP REQUEST FOR PROPOSALS May 15, 2007

  2. Agenda • Communication Protocols and Bidders’ Contact Log Reports • Limited Re-opening of Request for Qualification (RFQ) Process • Revision of Request for Proposal (RFP) Due Date • Discussion of RFQ and Request for Proposal Issues • Additional questions from Bidders

  3. Communication Protocols • Strict adherence to the communication protocols is essential to preserve integrity of RFP process • Any direct contact by a bidder will result in: • The bidder being told to use the web site for all communications • The PacifiCorp employee will record the time, date, bidder name and contact information, and any subject matter mentioned by the bidder • PacifiCorp will forward the information to the IE • The IE will review the infraction and take appropriate action • A bidder may be excluded from the RFP for violating the communication protocols

  4. Limited Re-opening of RFQ Process • All bidders whether they previously submitted an RFQ or not, may submit an RFQ as set forth in Section 2 of the RFP during the re-opening process • Any new bidders who did not previously submit an RFQ and who desire to do so during the re-opening process must submit the required information to be received no later than May 25, 2007 at 5:00 PM Pacific Prevailing Time

  5. Limited Re-opening of RFQ Process • For new bidders who have not previously submitted an RFQ, please submit five (5) complete copies of the RFQ to both the following addresses: Utah Independent Evaluator Merrimack Energy Group, Inc. c/o Utah Division of Public Utilities Heber M Wells Bldg, 4th Floor 160 East 300 South Box 146751 Salt Lake City, Utah 84114-6751 Oregon Independent Evaluator Accion Group and Boston Pacific Company, Inc. c/o Pacific Power Legal Department Attention: Natalie L. Hocken 825 NE Multnomah, Suite 2000 Portland, Oregon 97232

  6. Cure Date for RFQ Submissions • For bidders who have already submitted RFQs, the date by which to cure deficiencies in all May 7, 2007 RFQ submissions shall be May 25, 2007 • This includes satisfaction of any credit assurance requirements • Bidders have been contacted by the IEs with specific requests for documentation missing from initial RFQ submissions • Additional follow up requests will be forthcoming • Missing information to cure deficiencies can be submitted to the Utah DPU, PacifiCorp (Natalie Hocken) and each IE as directed in Merrimack Energy’s emails to bidders (does not require the 10 copies – just submit according to Merrimack’s instructions)

  7. Revision of RFP Due Date • The due date for RFP submissions (June 19, 2007) has been extended and Proposals will now be due June 29, 2007 at 5:00 PM Pacific Prevailing Time • All RFP bids must be submitted as set forth in Section 2 of the RFP • RFP submissions must be submitted using only the assigned bid number(s)

  8. Revision of RFP Due Date • The following must be sent to both of the following addresses: • A signed original and ten (10) hard copies of each bid and any required forms and • Two (2) electronic copies of the bid and any required forms (on two (2) separate compact discs) in PDF format Utah Independent Evaluator Merrimack Energy Group, Inc. c/o Utah Division of Public Utilities Heber M Wells Bldg, 4th Floor 160 East 300 South Box 146751 Salt Lake City, Utah 84114-6751 Oregon Independent Evaluator Accion Group and Boston Pacific Company, Inc. c/o Pacific Power Legal Department Attention: Natalie L. Hocken 825 NE Multnomah, Suite 2000 Portland, Oregon 97232

  9. Discussion of RFQ and RFP Issues • In order to ensure that all RFQs are complete and to minimize possible confusion regarding the RFQ requirements, PacifiCorp, in consultation with the IEs, has determined that certain clarifications need to be provided to bidders and that the due dates for the RFQ and the RFP need to be extended

  10. Clarification Items • Credit requirements • Eligible Resource Alternative categories • Separate bid proposals • Joint ownership structures • Revisions and modifications to the pro forma contract forms

  11. Credit Requirements • The following information presented regarding credit is designed to clarify the information presented on RFP pages 28-29, Appendix B and Attachment 22

  12. Credit Requirements • Credit is being used as an initial screen in the RFP process to identify Eligible Bidders (RFP page 24) • For each Eligible Resource Alternative proposed by a Bidder, Bidder must use the Credit Matrix in Appendix B to determine the maximum amount of credit assurances required (RFP page 29) • Bidder must inform the Company of the exact amount of credit security the Bidder believes it is required to post based on: • The Bidder’s estimate of its own credit rating and the rating of its credit support provider, if applicable • The type of Eligible Resource Alternative bid (Bidder should identify the Eligible Resource Alternative identification number listed in the RFP to eliminate any confusion) • The size of the Eligible Resource Alternative bid • The date the Eligible Resource Alternative is expected to commence service to PacifiCorp pursuant to its bid (2012, 2013, or 2014) • Whether the Eligible Resource Alternative is backed by an asset (RFP Attachment 21)

  13. Credit Requirements • If a Bidder is required to post security in an amount identified in an appropriate credit matrix, it must demonstrate its ability to provide the security by providing: • Type of security proposed (e.g. cash, letter of credit, guaranty) • Description of Bidder’s credit support provider • Commitment letter from credit support provider • After the Bidder has satisfied the requirements above, and if the Bidder or Bidder’s credit support provider does not have an external credit rating, the Company will calculate* an implied credit rating of the Bidder and/or Bidder’s credit support provider and will inform Bidder of any adjustments needed to the amount of credit security initially proposed by Bidder *Once the Company has sufficient financial information from Bidder and/or Bidder’s credit support provider

  14. Credit Requirements • Bidders are required to demonstrate their ability to post necessary credit assurances in the form of a commitment letter from a proposed guarantor or from a proposed financial institution that would be issuing a letter of credit (RFP page 29) • Credit support providers are also subject to the credit matrix, as there are limits on how much security the Company is willing to accept from them based on their credit rating • PacifiCorp clarifies that a “commitment” letter as opposed to a “comfort” letter is required in the form set forth in Attachment 22 • Commitment letters bind a third party to provide credit security up to an amount specified in the letter • Comfort letters, by comparison, contain no such commitment and therefore the Company cannot rely on the provider of a comfort letter to provide credit security • Bidders that do not obtain a commitment letter, if credit security is required, will be notified that they are not eligible to submit a proposal (RFP page 28)

  15. Credit Requirements KEY POINTS • Each Bidder's bid falls somewhere within a credit matrix • It is up to the Bidder to determine the amount it believes it is required to provide under an appropriate credit matrix based on its resource alternative, proposed term and capacity commitment • It is the responsibility of the Bidder to demonstrate its ability to provide credit security up to an amount in the credit matrix in the form of a commitment letter, not a comfort letter, from a qualified credit support provider • Credit support providers are also subject to the credit matrix, as there are limits on how much security the Company is willing to accept from them based on their credit rating • A Bidder’s demonstration of their ability to finance a project is separate and distinct from a demonstration of their ability to provide the required credit security

  16. Eligible Resource Alternative Categories • Must be base load resources for any of the 10 categories set forth on RFP pages 8-21 • Bid proposals must show how they satisfy this criteria • E.g., if wind proposal offered, must show how this satisfies base load requirement; how is wind dispatchable? • Two exception categories must meet the requirements set forth on RFP pages 12 and 22

  17. Separate bid proposals • RFQ submissions proposing multiple alternative proposals MUST submit separate detailed proposals for each alternative, including credit support information based on each proposal • E.g., offering a PPA and an APSA alternative in one submission is not acceptable • For purposes of submitting RFP bids – bidders are required to submit separate bid proposals for each Eligible Resource Alternative (see RFP pages 7-8)

  18. Separate bid proposals • RFP bid proposals must contain a specific commencement of service date (June 1, 2012, 2013 and/or 2014) • E.g., June 1, 2012 is acceptable; January 1, 2009 is not acceptable • In-service date deferrals or acceleration options within the term are allowed (see RFP page 6 and Form 2) • RFP bid proposals must contain the specific quantity being offered • E.g., 250 MW is acceptable; offering 100 MW or 400 MW in the same bid proposal, or up to 1500 MW, or “whatever the company wants” are not acceptable for RFP purposes

  19. Separate bid proposals • Proposals must clearly identify who the “bidder” or counterparty will be, as well as details of the project team • Each bid proposal must be signed by an officer of the company via the Officer Certification in Appendix E • Each bid proposal must contain the information required on RFP pages 30-32, 36-38 (Chart 4)

  20. Separate bid proposals • Clarification that all bid proposals must be for a minimum of five years and capacity of 100 MW or more with the exception of: • QFs which must have 10 MW or more of installed capacity • Load curtailments of 25 MW or more • Geothermal and/or biomass PPAs of 20 MW or more

  21. Joint Ownership Structures Permitted • Joint ownership structures, whereby a bidder would jointly own the assets of a newly developed resource with PacifiCorp, are permitted under the following Eligible Resource Alternatives: • #3 (APSA on PacifiCorp sites to PacifiCorp’s specifications) • #4 (APSA on bidder’s site) • RFQ for such a bid must include estimate of joint ownership percentages and proposed ownership structure (e.g., joint venture; 20% bidder minority ownership interest)

  22. Specific Provisions for Joint Ownership Structures • Due to PacifiCorp’s ownership interest in a jointly-owned project, the following would apply: • PacifiCorp would be party to both the APSA and the EPC contract • Change to Communication Protocol is required for this category: • Following RFQ submission for a jointly owned project, non-RFP personnel would be permitted immediate communication with joint-ownership bidders, but only in the presence of the IE • Pre-bid communication could relate to key terms required for a complete jointly owned project bid, including items set forth in RFP Appendix C–2, as applicable, and deal structure terms, level of joint ownership, emissions/permitting structure and responsibilities, fuel and water supply, site access, overview of EPC arrangements, project layout, and high level technical discussions • Post-bid communications could include developing a term-sheet for a Joint Operation and Maintenance Agreement, performance requirements, and more detailed technical discussions, including with EPC contractor if necessary • PacifiCorp reserves the right to waive the current RFP requirement that bidder enter into a 10-year O&M arrangement in context of jointly-owned facility

  23. Pro forma contract forms • Each bid must contain a statement that the terms and conditions of the pro forma agreements are acceptable to bidder or identify any significant exceptions • Bidders must submit revisions and modifications to the pro forma contract forms with a bidder’s responsive bid by the bid deadline • See RFP page 30

  24. Pro forma contract forms • Revisions to the forms are permitted without effect on the bidder’s non-price scoring factors • Modifications may include additions for any matters not currently included in the forms • E.g., provisions bidders may suggest to implement the pass through of costs associated with meeting future air quality requirements as set forth on RFP page 39 • Bidders may negotiate final contract terms that address CO2 risk, see RFP page 55, footnote 11

  25. Additional Bidder Questions • Questions?

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